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Australia still feeling the pinch from Backpacker Tax increase

The number of working holiday visa holders heading for Australian shores continue to slow, with visa applications dropping by almost 5000 in 2016-17. It continues the downward trend in working holiday-makers, but is the smallest decline in the past three years — indicating the Federal Government’s backpacker tax debacle may not have had as immediate an impact as anticipated. The Government introduced a new tax rate of 15 percent on working holiday-makers from January 2017, following a debate that raged much of last year.

Farmers — who count on backpackers as a source of ag labour — had feared the original proposed tax rate of 32.5 per cent would put off travellers. Department of Immigration figures, obtained by The Weekly Times, show 98,317 applications were lodged between January and June this year for 417 and 462 visas — down 1752 from the same period last year.

Second-year 417 visa applications were down by 479; second-year 462 visas — which have only been available since November last year — tallied 670. In total, 214,979 working holiday applications were lodged in 2016-17 — down from 219,875 in 2015-16, and 231,390 in 2014-15. Applications for 417 visas for the whole of 2016-17 — led by the UK, Taiwan, South Korea, France and Germany — dropped by 5803 to 194,468, including a 3874-drop in second-year applications, to 35,019.

Victorian Farmers Federation horticulture president Emma Germano believed the comparatively small decline was due to the 15 per cent backpacker tax decision. “I’m glad we only have to speculate as to what the outcome may have been if the tax rate had been at 32.5 per cent,” she said. Ms Germano noted the figures only considered the year as a whole not seasonal windows, adding there “was no question” there had been fewer backpackers around during the northern Victoria fruit harvest.

Agriculture Minister Barnaby Joyce said the figures showed Australia was able to stem the drop-off in applications from the previous year, but reiterated other factors such as economic conditions at home and the exchange rate also had an impact on numbers.

National Farmers’ Federation president Tony Mahar said the continuing downward trend was concerning and could impact on farmers’ profitability and productivity at harvest, and called again for a dedicated agricultural work visa.

“Until such time that appropriate measures are put in place to ensure farmers have reasonable access to labour, such as a dedicated visa to support farm labour needs, it is important that measures are in place to ensure backpackers continue to see Australia as an attractive place to holiday and work,” Mr Mahar said.

Mr Joyce said the Government was encouraging more Australians to take up agricultural work, through its Seasonal Work Incentive trial, which allows jobseekers to earn up to $5000 while still claiming Newstart payments, and the Seasonal Worker Program.